August 27, 2008


China corn prices down as traders stay on sidelines before harvest

China's corn prices in major producing areas were lower in the week to Wednesday, as traders stayed on the sidelines ahead of the corn harvest.


Corn prices in Changchun city of Jilin, a major producing province, were around RMB 1,640 per tonne, stable from a week before.


Corn prices in Liaocheng in Shandong province were at RMB 1,600 per tonne, down RMB 10 per tonne from last week.


Many industrial processing plants in areas near Beijing, including Shandong province, suspended production as part of environment protection measures implemented during the Beijing Olympics, and buyers were mostly feedmeal consumers, whose demand was limited, the China Corn Network said in a note.


Farmers and traders in northeast producing areas have no corn stocks on hand and processing plants there have to depend on their own stocks or purchase from other provinces.


Limited stocks will help to curb any fall in corn prices, said some traders, who expected corn prices to rise somewhat before the September harvest.


Meanwhile, with the conclusion of Beijing Olympics, the government may relax its grain price controls, which may also support prices, analysts said.


The government sold 108,057 tonnes of corn from its reserves on Tuesday, or 36 percent of the 300,841 tonnes it planned to sell.


The corn was sold at an average price of RMB 1,555 per tonne, up from RMB 1,552 per tonne a week ago.


For the most part, corn prices could remain at current levels in the near term on sluggish demand and supply pressure with the coming harvest, but in the longer run, corn prices may rise further on increasing feedmeal and industrial demand, analysts said.


US$1 = RMB 6.844 (August 27, 2008)

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